The 2023-24 Federal Budget presented a number of measures to address some of the major pain points for Australians, from housing and cost-of-living relief packages to overhauling Medicare and incentivising bulk billing. Among these measures, the government also introduced some new initiatives to support Australian businesses as the global economy faces its weakest rate of growth in decades, excluding the pandemic and the Global Financial Crisis in 2008.
To help you understand these support schemes, here are some of the key takeaways from the Federal Budget announcement. For a more in-depth expert analysis of these initiatives, be sure to talk to our team today.
Key Implications for Australian Businesses
Industry Growth Program (IGP)
The Government has allocated $392.4 million towards the Industry Growth Program (IGP). The purpose of this program is to support Australian startups and SMEs in commercialising their ideas and to promote growth.
The R&D Tax Incentive (RDTI) will still remain a major source of support for small businesses engaging in R&D activities, however, businesses should also start considering their eligibility for the IGP.
No Extension to Temporary Full Expensing (TFE)
Some of the temporary stimulus measures introduced during the peak of the pandemic have not been extended in the current budget, including Temporary Full Expensing (TFE), which allowed small businesses to deduct the full cost of eligible assets. From 1 July 2023, normal tax depreciation rules will apply.
Small Business Energy Incentive
Businesses with an aggregated turnover of less than $50 million will soon be able to claim an additional 20% deduction on investments that promote more efficient energy use, up to $20,000 per eligible entity. In addition to providing greater tax relief for small businesses, this incentive also supports Australia's commitment to reduce emissions and achieve net zero.
Instant Asset Write-Off
Businesses with an aggregated turnover of less than $10 million will now be able to deduct the full cost of eligible assets valued below $20,000. As the threshold is applied on a per-asset basis, small businesses will be able to instantly write off multiple assets.
Improving Tax Compliance for Small Businesses
A number of initiatives have been proposed to assist small businesses with their tax compliance, such as extending the period of time that small businesses can amend their income tax returns, to establishing five new tax clinics to improve access to tax advice and assistance. In essence, the Australian Taxation Office (ATO) will be given additional funding to facilitate tax-related administrative work to drastically reduce the time that small businesses spend doing their taxes.
Late Payment Penalty Amnesty Program
In an effort to keep businesses from disengaging with the tax system, the ATO will also offer amnesty to eligible businesses that have fallen behind on their payments. Businesses with an aggregated annual turnover of less than $10 million will not have failure-to-lodge penalties applied for outstanding tax statements lodged between 1 June 2023 and 31 December 2023 which were originally due between 1 December 2019 and 29 February 2022.
Improving Cyber Security
The Government is investing $23.4 million to train over 50,000+ in-house 'Cyber Wardens' over the next three years. Following the pandemic and improvements in cloud computing software, many Australian businesses have digitalised their processes without implementing the appropriate security systems, leaving them vulnerable to cyber-attacks. The Cyber Wardens program serves as a practical measure to help mitigate and reduce the damage associated with these attacks and improve digital hygiene.
Reducing PAYG & GST Instalments
The Government announced that they will be reducing the GDP adjustment factor for Pay As You Go (PAYG) and GST instalments from 12% to 6% for the 2023-24 income year. The reduced GDP adjustment rate will be applicable to both businesses and individuals with up to $10 million aggregated turnover for GST instalments, and $50 million aggregated turnover for PAYG instalments.
Introducing Payday Super
The Treasurer announced that, effective from 1 July 2026, employers will be required to pay Super Guarantee (SG) entitlements on the same day that employee wages are paid, rather than once a quarter. As the SG rate is set to increase to 12% as of 1 July 2025, the addition of 'Payday Super' will mean that employers need to update their payroll systems accordingly to prepare for the upcoming changes.
Concessional Superannuation Tax Rate
Earnings from superannuation are currently taxed at a concessional rate of 15%, however, earnings for members with superannuation balances above $3 million will be taxed at 30% from the 2025-26 income year. The remaining unresolved contentious issue is whether, for the purposes of calculating the $3 million threshold, it will take account of only realised gains and not unrealised gains on revalued investments.
Understanding the Implications
These key implications are just some of the many initiatives announced in the 2023-24 Federal Budget. Making sense of all of the new initiatives and understanding their impact on your business can be challenging, however, it isn't something that you need to do alone.
Azure Group can provide you with a comprehensive breakdown of the Federal Budget. We have helped our clients successfully navigate major changes from previous budgets with strong financial planning and advisory services. If you have any questions or queries about the 2023-24 Federal Budget, please feel free to contact us today.
Have you Have you noticed our #FridayExpertTips... here's one that relates to Financial Planning
"Setting goals for the next financial year is proven way to help businesses succeed. Don't leave it to late. Now that the Federal Budget has been announced, it is time to set your budgets and KPI's for the coming year."